Stanbic Uganda Holdings posted its strongest profit growth in three years in 2025, as its trading desk delivered a standout performance that more than offset a significant narrowing of net interest margins, illustrating how Uganda’s largest bank has rebalanced its revenue streams and reduced its reliance on the credit book.
The holding company, whose principal subsidiary is Stanbic Bank Uganda, said Monday net profit for the year to December rose 23.6 per cent to Shs590.8bn, the fastest pace of growth since 2022. The result comfortably surpassed the 16.2 per cent increase recorded in 2024 and 2023’s 15.2 per cent gain.
Gross operating income — total income before credit impairment charges — grew 11 per cent to Shs1.4tn, up from from 8.6 per cent in 2024, and was largely driven by non-interest revenue, which rose 21.1 per cent to Shs651.2bn.
While the credit book continued to expand, with net loans and advances to customers growing 16.4 per cent to Shs5.1tn, the fastest rate in three years, the income it generated grew far more slowly. Net interest income at the consolidated group increased by just 3.7 per cent to Shs788.3bn, a significant deceleration from 7.2 per cent in 2024 and 20.3 per cent the year before.
But rather than a general loosening of interest rates, the reduction in net interest income actually reflected the widening gap between lending rates and funding costs. The Bank of Uganda kept its central bank rate at 9.75 per cent throughout 2025, having reduced it from 10.25 per cent in October 2024. However, yields on government securities moved in the opposite direction, rising independently of the benchmark rate as the government expanded its domestic borrowing programme.
Treasury bond yields climbed steadily throughout 2025. Two-year paper reached 16 per cent, and ten-year bonds traded above 17 per cent at various points during the year. With private sector lending rates averaging around 18 per cent — albeit subject to credit risk, provisioning costs and regulatory capital charges — government paper was considerably more appealing. Stanbic responded accordingly, expanding its trading and investment securities books, and increasing income from these instruments by 48.4 per cent to Shs286bn at bank level.
Read: Uganda bonds draw strong demand as yields fall to near two-year lows
The other side of the margin squeeze came from funding costs. Interest expense on deposits surged 57.2 per cent as competition for customer deposits intensified, eroding the spread on the credit book even as loans and advances grew 16.4 per cent to Shs5.1tn — the fastest rate of loan growth in three years.
It was on the non-lending side that the bank found its impetus. Net trading income at the group, which includes gains on financial instruments, foreign exchange market-making, and related activity, rose 24.9 per cent to Shs380bn, the fastest expansion in at least four years and by far the strongest individual contributor to income growth during the period. Trading income now accounts for nearly half of net interest income, reaching a ratio of 48.2 per cent in 2025 — up from 40 per cent in 2024 and 38.1 per cent in 2023.
Net fees and commission income also made a solid contribution, rising 11.8 per cent to Shs241.9bn at the consolidated level, up from growth of six per cent in 2024. Foreign exchange income fell 15.7 per cent to Shs94.1bn, reversing a 93.3 per cent jump the previous year. The shilling remained stable throughout 2025, supported by a substantial build-up in Uganda’s foreign exchange reserves, leaving little room for the currency volatility that had driven the previous year’s gains.
Impairment charges fell 45.2 per cent to Shs18.6bn, following a 51 per cent decline the previous year, as the credit cycle continued to normalise after several years of elevated provisioning. Bad debts written off fell sharply to Shs25.3bn from Shs68.2bn, indicating that the underlying stress which had necessitated heavy provisioning in prior years has largely worked through the system. Non-performing loans increased to Shs89.4bn from Shs70.1bn, though this remained well within manageable bounds relative to the size of the portfolio.
Total operating costs, excluding impairment, increased 10.5 per cent to Shs612bn, producing a cost-to-income ratio that remained relatively stable at around 47 per cent — an indicator of reasonable operational discipline.
The proportion of core capital to risk-weighted assets increased from 19.7 per cent in 2024 to 21.3 per cent, while total qualifying capital reached 23 per cent of risk-weighted assets, up from 21.4 per cent. The group’s total assets expanded 10.9 per cent to reach Shs11.5tn, with customer deposits increasing 13 per cent to reach Shs8tn.
The board proposed a total dividend of Shs220bn, an increase of 37.5 per cent from Shs160bn a year earlier, equivalent to Shs4.30 per share. Earnings per share rose to Shs11.54 from Shs9.34.
